How the American dream went global: interview with Fareed Zakaria

Even as America’s middle class plateaus, says author and CNN host Fareed Zakaria, emerging nations are celebrating a confident new class of consumers.

"The United States has had a military, political, economic, cultural dominance over the last 20 or 30 years," says Zakaria. "Now we’re moving to an era of greater multipolarity, a genuinely global system where every part of the global system has countries that are rich and vibrant and participating."

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May 23, 2011

By Nora Dunne

When global affairs expert Fareed Zakaria started writing "The Post-American World,” it was 2006 and, despite the war in Iraq, the United States was dazzling global onlookers with its unmatched military power, seemingly limitless riches, and cultural supremacy. Yet, Zakaria, now a CNN show host and editor at large of Time magazine, foresaw “the rise of the rest.”

In this third great power shift of the modern era, countries worldwide – China, India, Brazil, and others – experience economic growth at previously unthinkable rates, as the US falters. I spoke with Zakaria about his theory, how it’s playing out, and his revised work, The Post-American World, Release 2.0.

Q.You wrote the original book before the US economy collapsed. How did the financial crisis affect your thesis?A. I’d be kidding if I said that I predicted the financial collapse. But what’s fascinating is that the financial crisis powerfully accelerated the forces I describe in the book. Its net effect has been to lower economic growth rates in the Western world, but to keep the growth rates in emerging markets largely unchanged.

The growth in emerging markets is not just at the economic level. It’s also happening in terms of psychology. Chinese, Indians, and Koreans are feeling a much greater sense of political confidence and assertiveness. You see this on the world stage everywhere.

Q. Governments are more confident, or their citizens?A. Both. Chinese officials point out in painstaking detail how they handle their economy much better than the United States handles its economy. Indian bankers say that their central bank was much more sensible [than America’s] during the boom years. In the past, everyone tended to think that America knew how to manage its macroeconomy better than anyone else. Now these countries are experiencing 30 percent growth every year.

You see it in the private sector as well. The emerging countries’ middle classes are now playing out the American dream. The Indian middle class, for example, is bursting with optimism. They’re buying on credit in a way that they never did before, because they were too scared of the future. Now they all believe their lives will be better than [those of] their parents, that their children’s lives will be better than theirs.

Q. You write that “the rise of the rest is a consequence of American ideas and actions,” but also say that these countries are entering the Western order “on their own terms.” How are they doing it?A. These countries have embraced open markets, open trade, free market economics – basic American ideas about how to control your supply. It’s the fundamental driver of their growth, growth that has produced a certain kind of cultural pride. It’s an inevitable consequence of success. Whenever societies do well, they believe that there is something in their cultural DNA that made it happen. The first phase of this power shift was a fascination with the West. But now these countries are rediscovering their own values and heritage.

Q. Will one of these emerging countries become the next superpower? I struggled with what to call the book. I called it “The Post-American World” because I really don’t think that we’re moving to a Chinese world or an Indian world.

It’s easier to define what we’re moving away from. We’re moving away from this period [that’s] rare in human history, where a single power has so dominated on every level of power. Certainly that was true of Rome, and you could argue for a brief period it was true of Britain. The United States has had a military, political, economic, cultural dominance over the last 20 or 30 years. Now we’re moving to an era of greater multipolarity, a genuinely global system where every part of the global system has countries that are rich and vibrant and participating.

Q. What does this mean for the average American?A. It’s going to be a challenge for the average American worker. The technological revolution at home makes it much easier for computers to do our work. The globalization revolution abroad makes it easier for low-wage Chinese, Indians, Brazilians, and Vietnamese to do our work. The trillion-dollar question is: How do American workers adapt to this new age of globalization?

The problem is our political system. There’s no way to make these adaptations without Americans agreeing on a series of reforms. Right now Washington cannot agree on what time of day it is, let alone significant reform.

Q. Have less contentious political ideologies helped the rising countries to flourish as they have?A. When you’re failing, there’s a very powerful incentive to put ideology aside and just do what seems to work. All these countries have succeeded with very simple pragmatism. The most ruthlessly pragmatic country, the Communist Party of China, has become a quasi-capitalist regime. How much more nonideological can you get when you switch from Communism to capitalism, just because it seems to produce growth?

We have no such pragmatism in the United States. To a certain extent it’s a product of success. We’ve always been able to get by on the diamond that was the American economy. That won’t work this time. We’re in a new age, and the competition is simply too fierce. It’s too genuinely global, and the technological forces are too powerful.